Can’t buy me love, can buy me passport

Dubious Practices of Gaining EU Citizenship

Source: European Commission’s website

As a kid, I used to love Cold War and spy movies. Never was there a better time to consume the “shaken, not stirred” culture than when you are imaginative, naïve and playful. Back then my home town hosted the British Council’s library, where I read all of Ian Fleming’s novels. Come to think of it, if I ever apply to work for the Council, I am pretty sure I will mention it in my cover letter or in the interview. Anyway, if there could be a modern meaning of the legendary phrase from the movie The Russians are coming, the discovery by some EU countries that business with citizenships can be a good way of attracting money to their countries could be an ideal contemporary application.

While we are used to the usual clichés surrounding Russian oligarchs coming to EU countries for a variety of reasons, especially if you ask Londoners and fans of football club Chelsea, nowadays some countries tend to be looked upon more directly due to the issue and the context. The International Monetary Fund pointed out in a report that wealthy individuals want an EU citizenship or residency rights in order to improve their mobility, tax planning and for their families’ security. Critics would add that the scheme destabilises the concept of citizenship as such, could be a strong security issue and an exit for Russians that want to avoid sanctions imposed on their country. Also, it could be used as a way to launder money. Not to mention the issue of migration, which is so sensitive in contemporary Europe.

The practice of giving away passports is often criticised in the media. For instance, the British press have written about it frequently, of course in their traditional Eurosceptic manner, arguing that the UK security is under threat. The BBC even made a documentary about it, and besides being moderate, diplomatic and old-fashioned, even named one article “Where is the cheapest place to buy citizenship?”. The newspaper The Guardian wrote that Russian and Ukrainian corruptive elites are among hundreds of individuals that obtained EU passports through these schemes. However, they would rather go to Malta or Cyprus, than to bother with obligations imposed by the UK. Also, one needs to take into account the strong and stable instability that the process of Brexit has brought.

The country I first had in mind was Malta. While it has been strongly criticised for its rule of law, especially in this week’s European Parliament plenary session, I will just focus on their Citizenship Act, which was introduced by the current party in power in 2013, firstly as a temporary measure to counter the budget deficit. For personal ethical reasons I will not mention the sums, but it aims to attract investments by giving not only the residence permit, but the full Maltese citizenship to people that invest a certain amount of money in the country. There is no residency requirement and the money goes into government funds. According to some numbers that I found online, more than 1000 individuals profited from this scheme.  They plan to sell 1800 passports, focusing on wealthy individuals from China, Russia and the Middle East, which would bring them almost a third of total annual government revenue.

The issue has created a deep politically divide in the small country, and the opposition is arguing that the scheme has nothing to do with investment in Malta, but with getting access to the freedom of movement offered by the EU citizenship. The whole process also lacks transparency, with a deficit in information on the amount of money, how the money is spent and who the people that are obtaining the citizenship are. Last month, even the Italian Anti-Mafia commissioner complained on the lack of transparency of the Maltese government, as the names could be connected to drug smuggling and similar criminal activities in Italy.

This practice has been strongly criticised in a European Parliament debate some three years ago, but not much has been done since. In addition to that, in the same year the European Parliament Research Service published a study called EU Citizenship and Residence Permits for Sale, which is available online and worth checking out. For the lazy ones, there is a decent summary as well.

To jump a bit from Plux to Schuman, the Commission recently stated that they cannot do anything to stop Malta, arguing that the EU Court in Luxembourg already had some cases where the outcome was that the citizenship matter is solely in the hands of each Member State.

The other country I had in mind is Cyprus. They have a scheme for “naturalisation of non-Cypriot investors by exception”. You can obtain their citizenship with direct investments, but you need to also have a private residence in Cyprus. In 2012, as a result of a financial crisis, they offered a quick way to obtain the citizenship by doubling the amount needed to directly invest. However, as it did not work out, a year later they decided to lower down the price of direct investment, aimed mostly to Russians. In the meantime, the price of direct investment was additionally lowered, and you can gain citizenship in around three months. A European Commission spokesman said some time ago that the issue was discussed in 2014 with the Cypriot government, but said nothing more than that.

The foreign investment scheme and “Golden visas” are not new and there are of course other European countries that offer similar models, like the Portuguese Golden Residence Permit programme, which gives foreign investors a residence permit. They are free to travel around the EU and after six years they can obtain Portuguese citizenship. The majority of applicants are apparently Chinese. Similar models exist in Spain and Greece as well. However, one needs to acknowledge the difference between giving away a residence permit and a country’s citizenship.

Basically we now have a situation where rich and well-situated individuals are buying themselves a place in the EU, while the poor and less lucky migrants are sleeping in parks throughout Brussels and Berlin. While every country reserves the right to have their own citizenship policy, it is deeply disturbing that we are witnessing this lack of transparency in the whole process, as well as justified fears that some criminal or corrupted elites are using the scheme to buy their way into the EU. As in similar debates, many would agree that some things should not be for sale.